A New “Credit Card” Rule Is Making Mortgage Qualification Easier Than Ever

[fa icon="calendar"] Oct 4, 2016 11:46:19 AM / by Eustis Mortgage

Eustis Mortgage


This year, nearly two-thirds of loan applications have been approved by mortgage lenders—and with a new “credit card” rule, these numbers are only expected to increase. According to the Federal Reserve, Fannie Mae has completely changed the way mortgage lenders calculate a borrower’s debt by altering the credit reporting industry.

Under the new rule, conforming mortgage lenders no longer hold credit cards paid in full against the applicant—meaning lenders no longer need to “close” the credit card to discount it from the borrower’s debt-to-income (DTI) ratio. This allows more mortgage applicants to get approved because it lowers their DTI and offers a better opportunity to build credit overall.

But does this mean you should always pay your credit card bill in full? According to the New York Times:

Even if you can’t always pay the balance in full, it’s always a good idea to make more than the minimum payment, to pay down your balance and save on interest charges. The addition of the extra payment information in credit reports used in many mortgage applications means that paying more than the minimum, if borrowers are able, makes even more sense, Ms. Armstrong said. [Mindy Armstrong is the Desktop Underwriter product manager in Fannie Mae’s single-family homes division.]

For more information on the new “credit card” rule, contact one of our mortgage specialists today.

Topics: mortgage news, mortgage qualification, credit card rule

Eustis Mortgage

Written by Eustis Mortgage

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